Bovespa Index Advances as Homebuilders Rise on Slowing Brazil Inflation

The Bovespa index rebounded from yesterday’s drop as consumer-goods maker Hypermarcas SA (HYPE3) rallied after a report that showed slowing Brazilian inflation fueled bets that further interest-rate cuts will help companies that sell to the local market.

Retailer Lojas Renner SA (LREN3) jumped the most in one month. Brasil Brokers Participacoes (BBRK3) was the best performer on the BM&FBovespa Real Estate Index after it agreed to buy a competing Brazilian real estate brokerage. Steelmaker Companhia Siderurgica Nacional SA (CSNA3) dropped to a one-month low after it was cut to “neutral” from “outperform” at Credit Suisse.

Brazil’s benchmark equity gauge gained 0.5 percent to 65,368.49 at the close of trading in Sao Paulo. Fifty-one stocks rose on the gauge, while 19 declined. The real weakened 0.2 percent to 1.7285 per U.S. dollar.

“We’re always a bit more sanguine about the risks of inflation as opposed to the bigger risk of slowing,” Michael Henderson, an emerging-markets economist at Capital Economics Ltd., said by phone from London. “We think there’s more room for easing.”

Brazil’s inflation, as measured by the IGP-10 index, slowed to 0.04 percent in February, from 0.08 percent a month earlier, according to the Rio de Janeiro-based Getulio Vargas Foundation. The figure trailed the 0.14 percent median estimate of 34 analysts surveyed by Bloomberg. Yields on Brazilian interest- rate futures contracts due in January 2013 touched a record low 9.25 percent.

Brasil Brokers, CSN

Brasil Brokers surged 6.5 percent to 7.40 reais. The company agreed to pay 25.5 million reais for a 55 percent stake in Bamberg Planejamento & Empreendimento Imobiliarios, according to a regulatory filing yesterday.

CSN, as Cia. Siderurgica is known, lost 2.4 percent to 17.45 reais, the lowest since Jan. 19.

BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest securities exchange, fell 2.2 percent to 12.04 reais after it reported fourth-quarter earnings that trailed estimates. Adjusted net income, which excludes extraordinary events, was 352.7 million reais ($204.1 million), below the average estimate of 377.3 million reais from nine analysts surveyed by Bloomberg.

The Bovespa dropped yesterday as metals prices declined after a report showing U.S. retail sales trailed estimates rekindled concern that global growth will falter.

The Bovespa has advanced 15 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.5 times analysts’ earnings estimates, which compares with a ratio of 10.6 for MSCI Inc. (MSCI)’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 9.79 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 6.59 billion reais this year through Feb. 7, according to data from the exchange.

To contact the reporters on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.